Deciding how to divide retirement benefits during a divorce might seem easy, but many people find that it is one of the most challenging parts of the divorce process. Not only is it critical to determine whether you will divide the assets with your spouse or keep them to yourself, you also must answer a number of other complex questions. This article reviews just some of the most critical factors that will influence how you divide your retirement plan. 

The Type of Retirement Plan Involved

A “retirement plan” is a general phrase that refers to several types of plans that people receive through their employers. These plans are often divided into either denied benefit plans and defined contributions plans. Defined benefit plans provide workers with a certain amount of benefits on retirement based on the time that the employee worked as well as the pay received. Defined contribution plans, which are most often 401(k)s, are based on a worker’s contribution to the plan, but are often supplemented by contributions that are made to the employer. Not only must these accounts be divided in different ways, but it can also be much more challenging to determine the value of defined benefit plans rather than defined contribution plans. 

The Duration of Your Marriage

If you decide to value your retirement plan, it is not as easy as deciding what the plan’s value is on the date of your divorce. Instead, the amount that your retirement benefits increased during your marriage will be viewed as marital property. As a result, the length of your marriage will end up deciding on how much of your retirement plan becomes part of marital property. The longer the marriage, the more your former spouse is likely to receive during the division of marital assets. 

Whether a Former Spouse Has a Retirement Plan

When deciding how to divide your retirement benefits, it is important to consider whether your spouse has his or her own retirement benefits and whether the receipt of these benefits would allow the spouse to maintain the same standard of living. If a spouse has a comparable retirement plan, you will likely be allowed to keep assets in your own plan. If your retirement plan is more substantial, however, you will likely be expected to share these assets during divorce.

How Your Spouse Plans on Using the Benefits

As part of the retirement plan distribution process, spouses must decide when and how they will receive benefits. You might plan to receive your share of retirement benefits immediately at retirement or you might delay the receipt of payment until you need them. When you decide to disperse benefits can influence how much you ultimately receive, particularly if withdrawal of assets is subject to a penalty.

Speak with an Experienced Divorce Attorney

Dividing your retirement benefits is just one of many important issues involved in a divorce. To navigate this step as well as many other issues, it can help greatly to retain the assistance of an experienced family law attorney. To schedule a free consultation, contact Vayman & Teitelbaum, PC today.